My wife and I have been waiting patiently for many weeks, armed with a watchlist of shares to buy. At long last, and after much bureaucracy and paperwork, we finally received our cash windfall this month.
Within days, we had invested a large chunk of this bonanza into cheap shares. And then, of course, the London market lurched lower. Typical.
Three shares to buy and hold
In our latest buying spree, we added 10 new holdings to our growing family portfolio. In total, this pot now contains 27 stakes in various US and UK businesses. For me, that’s about the right number for a reasonably well-diversified portfolio.
Our latest buys include shares we purchased purely for dividend income, plus others we will hold for long-term capital growth. All 10 were cheap UK shares, simply because I currently regard the US stock market as overvalued, both in historical and geographical terms.
Of all the shares to buy on my list, many would consider the following three stocks to be the most ‘boring’. But I regard these new holdings as having great potential to produce superior, market-beating returns in future. Here they are (sorted from highest to lowest dividend yield):
| Company | Sector | Market value | Dividend yield | One-year change | Five-year change |
| Hargreaves Lansdown | Financial | £3.6bn | 5.3% | -21.2% | -65.1% |
| BP | Energy | £80.9bn | 4.6% | +6.3% | -16.7% |
| Unilever | Consumer goods | £99.5bn | 3.8% | +0.9% | -10.4% |
Two giants and a minnow
Two of these companies — BP and Unilever — are giants of the FTSE 100, with market capitalisations nearing £81bn and £100bn, respectively. Meanwhile, the third firm, Hargreaves Lansdown, is a relative minnow, with a valuation below £4bn.
Of all the shares to buy on our list, BP was the hardest to convince my wife to own. After all, as a major oil & gas producer, it is one of our planet’s biggest polluters. But I hope that the group will use its enormous cash flows to accelerate its transition into a renewable-energy player.
One old City saying states, “elephants/dinosaurs don’t gallop” — so I don’t expect our BP and Unilever shares to shoot the lights out. But as leaders in their respective fields, I do expect these firms to continue to shower shareholders with dividends and buybacks for decades to come. And that’s why I see both as exciting, rather than boring, shareholdings.
Dividends while I wait
Another thing I’d point out is that all three stocks have lost value over the last five years (excluding cash dividends). Indeed, online investment platform Hargreaves Lansdown‘s shares have collapsed by almost two-thirds in the past half-decade. But I hope these trends will reverse over the next five years.
Furthermore, as share prices fall, dividend yields rise (all else being equal, that is). And the average dividend yield from these three stocks is nearly 4.6% a year at present. To me, that’s a more than adequate reward to buy and hold shares for the long run!
